The American Banker‘s Jeff Horwitz has another excellent report on the Federal Housing Administration and its former commissioner David Stevens, who took a bold spin through the revolving door earlier this year to become CEO of the Mortgage Bankers Association.
Two weeks ago, Horwitz and Kate Berry wrote about Stevens’s coziness with his future employers while he was at the FHA.
Here the Banker guts a key defense used by Stevens to justify his move:
An “unprecedented crackdown.” That’s how Commissioner David Stevens described a get-tough program that took place under him at the Federal Housing Administration from mid-2009 until April of this year. As part of the push, the FHA’s Mortgage Review Board issued more administrative actions against lenders in Stevens’ first year than it had in the prior eight years combined…
In contrast to the image Stevens so carefully groomed, his record as a disciplinarian is based largely on a vastly eased definition of enforcement that inflated the agency’s action count.
Statistics indicate that the vast majority of matters brought to the mortgagee review board under Stevens were not “fact-based” ones involving misconduct harmful to borrowers or the FHA’s insurance fund. Instead, 92% of actions under Stevens were “recertification cases,” which generally involve small lenders and brokers who failed to submit paperwork on time — often because they have ceased originating FHA loans or gone out of business. The FHA review board’s small office simply mailed registration violation notices to slews of marginal players and then submitted their names en masse to the review board for official action, sources familiar with its activities say.
In other words, it was a PR stunt to make it look like the FHA was getting tough on lenders when it really wasn’t. Worse, the Banker reports that at least one source inside the FHA says that stunt interfered with real enforcement.
Great work by the Banker.
— That’s hardly the lone tough-on-financial-crime PR stunt by the Obama administration. Michael Hudson and Ben Hallman, of the Center for Public Integrity’s iWatch News, report on the FBI’s doings:
In a new report , the Federal Bureau of Investigation pats itself on the back for using “sophisticated investigative techniques” to target mortgage fraudsters. The FBI’s 2010 “Year in Review” mortgage fraud report says the agency has used wiretaps, undercover operatives and “tactical analysis coupled with advanced statistical correlations and computer technologies.”
Not everyone is impressed.
Consumer advocates say the FBI is missing the big picture, focusing its investigative muscle on small-time crooks and turning a blind eye to misconduct by big banks.
And iWatch is good to recall Attorney General Eric Holder’s stunt last year on “Operation Broken Trust,” which used bogus numbers on small-fry prosecutions for PR purposes.
There seems to be a pattern here.
— Michael Barone takes to the op-ed pages of The Wall Street Journal to talk about the supposed Texas Miracle and why the Midwest’s economic model is in decline. Guess what? He blames Big Labor.
But there’s a giant hole here: Barone doesn’t mention anything about trade policies and/or the decline of American manufacturing, both of which have hit the Midwest particularly hard.
It’s almost as if the “Fall of the Midwest Economic Model” was a natural phenomenon rather than the result, in no small part, of a concerted effort of thirty-plus years of governments and Big Business working hand in hand to dismantle the labor movement and to empower capital.
A calcified labor movement certainly contributed to the Midwest’s problems, but not acknowledging the broader trends is disingenuous.
Speaking of disingenuousness, there’s this as a bonus:
Foreign auto manufacturers built plants in a South recently freed from state-imposed racial segregation.
Get that? Barone the “state” gets the blame for racial segregation, as if it wasn’t at all demanded by voters. But the “state” (think Washington and the courts) gets no credit for desegregation, as if the South was “freed” by the hand of God. Nifty.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.